Stop Wage Garnishment in Texas with Bankruptcy

Texas is one of the few states in the country that generally don’t allow the garnishment of wages for collection of consumer debts. But there are major exceptions where garnishments CAN occur, including:

child support and alimony

federal taxes

student loans

if your employer is out of state

a judgment against you was entered in another state

for wages deposited into a bank account, including by automatic deposit

If you file either a Chapter 7 or Chapter 13 case, that will immediately stop most garnishments either temporarily or permanently.

The Garnishment Bankruptcy Won’t Stop Immediately

Regular monthly child and spousal support obligations are not stopped by any bankruptcy filing.

But if you fell behind on your support obligation and now owe back support, how that is affected depends on which Chapter you file. Chapter 7 will not stop the garnishment of back support, whereas Chapter 13 can. In a Chapter 13 case your payment plan must arrange for payoff of the back support during the case. So as long as you are making your plan payments on time, along with keeping current with any ongoing support, garnishment of your wages for the back support will stop.

The Wage Garnishments Bankruptcy StopsOnly Temporarily

Besides the support obligations discussed above, your bankruptcy filing will stop virtually all garnishments through the power of the “automatic stay.” That’s the law that automatically goes into effect as soon as your bankruptcy case is filed. Its tays—or stops —virtually all collection activity against you and your property.

But the “automatic stay” only lasts as long as your case is active, which is generally only about three months in a regular Chapter 7 case. If the debt is discharged—legally written off—in that Chapter 7 case, then there will be no further collection of that debt, including no further garnishment. Since most conventional consumer debts are discharged—including presumably most debts related to out-of-state judgments or being collected through out-of-state employers—the garnishments should not resume on those.

However, many taxes and almost all student loans are not discharged in Chapter 7, so garnishments to collect on those obligations can continue when the Chapter 7 case is finished.

Permanently StoppingGarnishment for Income Taxes and Student Loans

As to taxes, a successfully completed Chapter 13 case would both immediately and permanently stop garnishments. Why? Because a Chapter 13 will discharge certain tax debts, and also will require you to pay off in your plan the remaining tax debts which are not being discharged. So, at the end of the Chapter 13 case there would be no more taxes owed, nothing more to garnish.

Student loans have their own complications. They are very difficult to discharge. They usually can be only in situations of serious, extended hardship. This “undue hardship” must be established through a lawsuit and a resulting court determination of that hardship. If that level of hardship is established and the debt discharged, then there will be no further garnishment.

But that’s rare. If the student loan is not discharged through a court determination of “undue hardship,” then the student loan lender will be able to re-start garnishments as soon as either the three-month or so Chapter 7 case is completed, or the three-to-five-year Chapter 13 one is.

Wage garnishments are unquestionably complex, even in Texas where they are not nearly as common as in most other states. At the Law Offices of Carrie Weir we will help you get the protection you need from any actual or potential garnishments. If you live or work in the Dallas-Fort Worth metroplex, to find out about your options contact me, Carrie Weir, for your free and confidential consultation. Call me at 972-772-3083 or after business hours use thisthis contact form. Thank you.